Bitcoin’s price has increased massively in the past few months, accelerating from $ 11,000 to nearly $ 62,000. However, these impressive rallies also include relatively calm price movements.
These periods are consolidating and are needed for the market to find a new floor. In the bull markets after these periods, the uptrend is likely to continue before another uptrend can kick in.
Currently, the price of Bitcoin (BTC) appears to be a little over a week in such a period, after hitting an all-time high of over $ 61,000.
The USD 53,000 level must be held to avoid further downward moves
The four-hour chart for BTC / USD is showing a significant downtrend since its most recent all-time high in mid-March. It did so after a breakthrough over $ 58,000. However, this move showed weakness as there was no evidence that new buyers had more upside.
In other words, bullish strength would show with an increase in volume, which it did not. Therefore, a correction to USD 50,000 is a perfectly normal and healthy occurrence for this market.
Additionally, the graph shows a short-term downtrend in which lower highs and lower lows are constructed. In this regard, the price of Bitcoin ended up in the $ 53,000 support zone, which can be classified as a critical support zone.
If that $ 53,000 support is insufficient, further correction towards $ 49,000 to $ 50,800 is inevitable and the markets will see more blood.
On the other hand, if the $ 53,000 area holds, Bitcoin’s price will have to break through the $ 56,200 area to regain strength. In this regard, the USD 56,200 area can be viewed as the critical resistance zone to be broken right now.
Even if $ 56,200 breaks, more resistance will remain before Bitcoin price can hit new all-time highs.
The daily time frame shows a massive bull cycle
The daily chart for Bitcoin shows what appears to be an upward trend, making higher highs and higher lows. Traders and investors should always zoom out to avoid confusion about the overall trend. Simply put, Bitcoin’s price movement is still bullish.
Hence, a correction of the $ 50,000 area would still be very normal, if not expected, as the $ 50,000 area is a massive support zone.
Even if Bitcoin’s price corrects further towards the $ 44,000 area, the bullish construction is still in place as these sideways areas have been fairly common since breaking the 2017 all-time high.
As long as Bitcoin stays above $ 44,000, and preferably $ 50,000, the bearish divergence will be invalid as history has shown several examples of this.
Similar construction after halving in 2020
The chart construction after the halving of May 2020 looks identical to the recent price movement of Bitcoin. With that in mind, a failed breakout does not guarantee that a bear market is imminent.
Bulls should be patient as a new floor may be set on the price of Bitcoin. After this compression and construction, a new impulse wave can appear again, as can be seen in August 2020. During this period, the price of Bitcoin rose from $ 9,500 to $ 12,000.
The graph above shows the invalidation of bearish divergence as no new lower lows have appeared. The current price action could be to paint a similar picture where a low must be hit between $ 44,000 and $ 50,000 to avoid new lower lows. If so, the price of Bitcoin will wipe out the bearish differences and the bull market will continue.
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